GST Applicability on Charitable & Religious transactions

We generally are of the view that entity registered under section 12AA of the Income Tax Act & doing charitable activities are exempt under the GST Law. But this is not the fact and all the transactions are not exempted. It depends upon case to case if there is a thin line of differences in activities carried out by the trust, GST implications are changes. According to Notification No. 12/2017 – Central Tax (Rate) dated 28th June, 2017 issued by GST Council, exempts services provided by entity registered under section 12AA of the Income Tax Act, 1961 by way of charitable activities from whole of GST vide entry No. 1 of the notification, which specifies that “Services by an entity registered under section 12AA of Income Tax Act, 1961 by way of charitable activities” are exempt from whole of the GST.

What are the activities fall under such notification & what are the conditions to avail such exemption under GST is covered under the article of “Exemption to trust from GST” you can visit for basic understanding relating to Charitable and Religious Trust.

Following are the some questions & Answers which may solve your queries regarding Charitable and Religious Trust is required to pay GST or not?

Question on Religious Place

A) If properties are not situated in the precincts of a religious place meaning thereby not within walls or boundary walls of the religious place, then whether income from such letting out will be liable to GST?

Ans: According to the notification if immovable properties owned by charitable trusts like marriage hall, convention hall, rest house for pilgrims, shops situated within the premises of a religious place are rented out, income from letting out of such property is wholly exempt from GST. But if such properties are not situated in the precincts of a religious place meaning thereby not within walls or boundary walls of the religious place, income from such letting out will lose this exemption and income from it will be liable to GST.

Question on Religious Ceremony

B) Whether all income received from Religious Ceremony is Exempt?

Ans: According to notification income from a religious ceremony organised by a charitable trust is exempt. So the income from Navratri functions, other religious functions, and religious poojas conducted on special occasions like religious festivals by persons so authorised for this purpose the charitable or religious trust are exempt from GST.

But after the careful reading of exemption notification, it shows that all income from such a religious ceremony is not exempt (services other than by way of conduct of religious ceremony are not exempt). Therefore, the nature of income is an essential factor for ascertaining whether it will be taxable or exempt. If income loses its religious nature, it is definitely chargeable to GST.

For example, if with regard to religious functions, charitable trusts rent out their space to agencies for advertisement hoardings, income from such advertisement is chargeable to GST, as this will be considered as income from the advertisement services.

Question on Donation Received for Religious Ceremony:

C) Whether every donation received to Trust is exempt from GST?

Ans: If donation for religious ceremony is received with specific instructions to advertise the name of a donor, such donation income will be subject to GST. But if donation for religious ceremony is received without such instructions, it may not be subject to GST.

Question on sale of goods by Trust:

D) Whether GST is attracted on goods sold by a charitable trust?

Ans: Goods that are sold by a charitable trust is taxable. The charitable trust must pay the GST rate applicable while purchasing the supply.

Question on services provided to charitable trusts:

E) Whether services provided to charitable trusts is exempt from Tax?

Ans: Services provided to charitable trusts are not out of ambit of GST. All services other than those specifically exempted provided to charitable trusts will be subject to GST.

Question on training programmes, camps, and events:

F) Whether GST is applicable on training programmes, camps, and events conducted by a charitable trust?

Ans: If above activity is conducted without any entry fee/ Charges then only it is exempt, otherwise activities that are not free for participants, it will be considered as a commercial activity and hence will be liable for GST.

Even the donation received for such an activity will be liable for taxation under GST.

Note: Services provided by way of training or coaching in recreational activities relating to arts and culture, or sports by a charitable entity will be exempt from GST.

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